Leading Indian PE firm validated INR 50,000 Cr online SME lending opportunity via credit analysis

Context:

• An Indian PE player wanted to invest in a SME lending Fintech and wanted to understand the market opportunity, credit model, competition and analyze business model projections

Our approach:

• Defined the Indian SME Lending market landscape and estimated its market size
• Management discussions to understand company operations and business plans
• Analytics team discussion to deep dive into underwriting algorithm and delinquency estimates
• Conducted In-depth Interviews with various stakeholders and experts (N=25) to understand the nature of partnerships, benchmarking against competitors especially on underwriting technology and product reviews

Praxis value delivered:

• Estimated the size of online led SME lending opportunity in India, divided basis acquisition channels
• SME lenders have similar underwriting models and acquisition channels
• Most SME lenders are following a hybrid marketplace approach, wherein, they have their own NBFC alongside other financial institutions to lend on the platform
• SME Fintech lenders have developed underwriting models to provide credit to digital SMEs associated with anchors across the ecommerce landscape
• Customers, anchors, and platform lenders shared their feedback about the given target, and helped understand the team structure, terms and profiles
• Unit economics for anchor led acquisitions of digital SMEs suggest a profitable business